Labor's legacy & broken Coalition promises

Posted by Andrew Leigh MP5sc on November 13, 2013

I delivered a speech in the House of Representatives today - what's called an 'Address in Reply' in response to the Government's opening speech - exploring Labor's strong economic and policy legacy. I urged the ALP to remain the party of big ideas and one underpinned by key principles of fairness, inclusion and equality and I lamented the Abbott Government's early and disappointing broken promises. Here's the full text thanks to Hansard.

Can I congratulate the members for Bass and Corangamite on the passion with which they have delivered their first speeches and hope that they will serve their constituencies with the same energy and passion as their predecessors did.

I want to begin my remarks today with the stories of two constituents of mine: Carol and Denise. Denise has a 21-year-old son, Tim, with Down syndrome. She regularly has to prove his eligibility for a modest Centrelink payment and work within a system that has not been working for her and has not been working for Tim. Tim's chromosomes are not going to change, but the old system required her to prove that. DisabilityCare will change that.

Then there is 48-year-old Carol, who works as a cleaner. Despite working on Sundays to earn some overtime she still earns less than $37,000 a year. Carol is not alone. A lot of low-income workers in cleaning, aged care, retail and hospitality are not full time and they are predominantly women. The removal of the low-income superannuation contribution will affect 3.6 million Australians and two-thirds of them are women. All of them, like Carol, work hard to make ends meet. They are the mothers who work part time because they are looking after young children. For them, saving for later in life is not a tax strategy.

DisabilityCare and the low-income superannuation contribution demonstrate how Labor take the initiative to defend those who are doing it tough. Labor are the party of ideas and we are the party of reform, the party with the courage to make the big decisions when they are needed. As the opposition leader said at this year's Fraser lecture:

'We’re the dreamers, doers and fighters.

'We have ideas, and … we’re prepared to fight to make them a reality.'

I agree. Only the Labor Party is prepared to fight for a fair go for all and shoulder the responsibility for reform. Only Labor knows that reform must balance economic imperatives with social need and hope. I am sorry to say that that is in stark contrast to the approach of the Abbott government. We have already seen how quick they are to protect sympathetic vested interests and how much quicker they are to slug those doing it tough.

The Treasurer would have you believe that drastic action has to be taken because of the economic legacy left by Labor. Over the next few weeks we are doubtless going to hear, time and time again, what a terrible state the economy is in. Before the Treasurer attempts to airbrush recent history, let's take a sober and sensible look at the economy that the government have inherited and what they have done with it so far. That look has to recognise the simple, fundamental truth. The government have inherited economic statistics and public finances that are better than those of almost any country in the developed world.

In Business Spectator Stephen Koukoulas wrote, following the 2012 budget outcome in September this year, about some of the salient economic statistics. He pointed out that the budget deficit had fallen to 1.2 per cent of GDP in 2012-13, a reduction of 1.7 per cent in the deficit from the previous financial year. This was, as Mr Koukoulas pointed out, the largest year-to-year fall ever recorded for a budget deficit. Net government debt rose by a paltry 0.1 per cent of GDP in 2012-13, and a 10.1 per cent of GDP gives us one of the lowest levels of government net debt in the world.

Australia remains, despite talk of budget emergencies, one of the few countries to maintain a AAA credit rating from all three international ratings agencies. It fell to the Labor government to deal with the worst economic crisis since the Great Depression. But, at the end of that, we left Australia with an unemployment rate well below the average for the developed world and with a level of public debt well below the average for the developed world.

In spite of the global financial crisis we created over one million new jobs, while the rest of the world shed 29 million new jobs. Australian families saw their interest rates fall. A family with an average mortgage of $300,000 was $5,500 better off than they had been when the coalition were last in government.

When he released the budget outcome, the Treasurer claimed that the next year's budget would be the legacy of the Labor Party. How times have changed because, when asked on 6 August, when would a coalition government own the economy, the Treasurer answered:

'We will own the economy from day one, whether it's Labor's fault or not. I'm not afraid to accept responsibility and I'm not afraid to be accountable.'

But as soon as he became the Treasurer the tune changed. As Stephen Koukoulas has argued, the government has inherited some of the best budget and government debt circumstances in the world. As a share of GDP, government spending is 24 per cent in 2012-13, a little less than the average of 25 per cent over the last 30 years, and approximately the same as the average spending to GDP ratio under the Howard government.

Let us not have the rhetoric of 'profligacy' and 'budget emergencies' in this place. No coalition government has ever once delivered a single year in which there was a cut in real government spending. By contrast, Labor delivered real spending cuts in the last year's budget. Not only did we deliver real spending cuts, we delivered nominal spending cuts. Despite inflation, dollar spending actually fell.

So much for the Treasurer's bluster about waste. Labor's investments were vital investments for Australia's future: DisabilityCare, Better Schools, making sure that Australia's low-income workers did not end up getting a worse deal out of superannuation than the highest income workers. I look forward to the explanations of the Prime Minister, his hand-picked adviser Maurice Newman and the Treasurer to people like Carol and Denise, who are seeing threats to DisabilityCare and who are seeing their superannuation taxes rise, and to those unemployed Australians who are seeing an effective cut in unemployment benefits through the withdrawal of the income support bonus. I look forward to them receiving an adequate explanation from the Prime Minister and the Treasurer.

Treasury estimates that 36 per cent of tax concessions for superannuation contributions went to the top 10 per cent of income earners. As for the bottom 10 per cent, they were actually penalised rather than subsidised out of the superannuation system. This is not fair. It is not fair for people on low or modest incomes to give up more to increase their superannuation savings. It is not fair that this government places a higher priority on looking after 16,000 Australians with superannuation assets over $2 million than it does on looking after the interests of three million low-paid workers, two million of whom are women.

The Prime Minister has made a great deal of the importance of promise keeping. A few days before the election he told the doyenne of the press gallery, Michelle Grattan, that he would 'move heaven and earth to keep commitments and only if keeping commitments becomes almost impossible' could he ever be justified in not keeping them. He went on to say, 'The electorate would take a very dim view of breaking promises, even in difficult circumstances.' After just three weeks in office this government had already broken three promises.

The first has been the budget non-emergency. After railing against debt and deficits, after relying on the misleading gross debt figures, the Treasurer was already looking to reclassify debt so he could borrow more for his favourite projects. The budget deficit is going to be significantly larger under Treasurer Hockey than it would have been under Treasurer Bowen. This week the Treasurer will ask the parliament to increase the debt limit to half a trillion dollars. We on this side of the House understand and support a necessary increase to the debt limit. We will move amendments to set a debt limit of $400 billion. We are not going to play Tea Party games with the economy. But we demand the Treasurer be up-front and honest with the Australian people about why he wants an increase to $500 billion, why he wants a 66 per cent increase in the nation's credit card limit. The Treasurer has refused to release the Mid-year Economic and Fiscal Outlook, his mini-budget, which would track any estimated increase in peak net debt and which would show whether those decisions were decisions for which the new Treasurer should take responsibility. It is not reasonable for the Treasurer to expect Australians to tick off a two-thirds increase in the nation's credit card limit with no information provided.

I think Treasurer Hockey is probably the only person in Australia who thinks he can nearly double his credit card limit without a single bit of paper to justify it. It was low-doc loans that got the US into some of its financial strife, but the Treasurer is now effectively asking this parliament for a no-doc loan. That is not good enough. As a prominent Australians said of a prior debt increase in May 2012:

'Our money, our future is too important to be mortgaged like this without government giving us the strongest possible argument for it. Every dollar they borrow has got to be repaid.'

That is the now Prime Minister speaking on 2GB in May 2012. What the opposition is asking of the government is nothing more than Mr Abbott asked of us in May 2012.

The Treasurer has topped up the Reserve Bank with close to $9 billion, an increase which it has funded through borrowing, costing the Australian taxpayer a million dollars a day. Again, it is a no-doc decision. Australians do not have the information in front of them to enable them to judge whether or not that is a reasonable course of action. Last week the Treasurer announced changes to taxation that will increase the budget deficit by $3 billion over the forward estimates. He has watered down Labor's attempts to get multinationals to pay their fair share of tax. Profit shifting is a vital international issue.

The G20 will be discussing this. Labor's reforms to stop profit shifting would have added $1.8 billion to the budget. But, by the coalition's reckoning, after they have finished their attempts to deal with profit shifting will only net $1.1 billion. That is money that has to be made up. That $700 million difference either means a reduction in services for Australian households or higher taxes.

As the shadow Treasurer stated:

The fiscal deterioration, the $9bn RBA grant and other major revenue announcements have all occurred since 7 September on Mr Hockey’s watch.

If, as he said on 6 August, the Treasurer owns the economy from day one and is not afraid to accept responsibility, then this broken promise falls squarely to him. Trying to blame Labor for the 2013-14 budget outcome would be like a coach who takes over a quarter of the way through the season and then tries to blame his predecessor for the finals result.

The second broken promise is the pledge that no public servants would be fired. That pledge was broken on the first full day the Prime Minister was in his job, when three agency heads were fired...

(The debate was interrupted).

I rise to speak in continuation. In the intervening period since I last spoke we have had an extraordinary intervention. I was speaking about broken promises by this government and we just had a question time in which the Treasurer was asked whether we will have three AAA ratings at the end of this government's term in office. He responded: 'I would certainly hope so. We were the ones who got them in the first place.' I have heard of a wing and a prayer, but that is, frankly, a hope and a mistruth, because of course three AAA credit ratings came under Labor, not under the coalition.

The second broken promise was the pledge that Public Service cuts would come by natural attrition. In my electorate, a postgraduate student, Dionne Wong, is one of dozens of young people deeply disappointed after their contracts were terminated. After having signed a contract with AusAID, DFAT has told her she is 'surplus to requirements'. That is not natural attrition; that is smashing the dreams of young people. At the same time we have seen AusAID staff being brought into the DFAT atrium, herded in like cattle, while DFAT colleagues look down upon them from the higher floors and one of them mimes machine-gunning the AusAID staff. That is not the way to bring about change management in an organisation.

Maybe I should not be surprised that a government without a science minister is slashing the CSIRO. Again, it is not by natural attrition but brutal cuts that will soon turn into forced redundancies.

There is a third broken promise. On 26 September the Prime Minister said:

'The assurance that I give the superannuants and the superannuation savers of Australia is there has been no adverse changes to their superannuation arrangements under this government.'

This is false. Three million low-income earners will have the low income superannuation contribution taken away from them. For them, this is indeed an adverse change.

In his Fraser lecture the Leader of the Opposition recounted how at his campaign launch Paul Keating had said Labor was on the side of the angels, and that the angels are:

'… the men and women of Australia … who make the place what it is, the ones who've got nothing to sell but their labour, nothing to sell but their time. No capital, particularly, and who need the support of the political system to give them a better standard of living, a better way of life and a better future.'

This is what Labor stands for and that is what we on this side of the House will be fighting for over the next three years.